Rivermate | Product owner - Andrew Simon

Global Work Glossary

What is Employee Lifetime Value (ELV)?

Employee lifetime value (ELTV) is a critical metric in business, quantifying the total anticipated value an employee brings to an organization throughout their tenure. Much like customer lifetime value in marketing, ELTV assesses the long-term impact of an individual's contributions.

ELTV Formula and Calculation

The ELTV formula is straightforward: Average ELTV equals the ratio of average yearly revenue to the total number of employees, multiplied by the average length of employment. While this offers a broad overview of employee value, it lacks specificity for hiring decisions.

Significance of ELTV

In today's competitive job market, HR departments must optimize resources wisely. ELTV aids in rationalizing hiring decisions by evaluating potential returns on investment. It helps identify candidates whose ELTV outweighs others, guiding recruitment choices.

Enhancing ELTV

To boost ELTV, companies should invest in training, fostering growth opportunities that enhance employee retention. Cultivating a positive workplace culture through various activities fosters employee engagement, consequently elevating ELTV. Additionally, streamlining onboarding processes reduces costs and accelerates value contribution.

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